SYNOPSIS: DOL is revising its regulations in Title 41 of the Code of Federal Regulations, Public Contracts and Property Administration; Chapter 60, Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor; Part 60-741, Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Individuals with Disabilities (41 CFR Part 60-741), to list the standards for granting separate facility waivers and the factors that will be considered when determining whether to grant such waivers.

SUPPLEMENTAL INFORMATION: The American with Disabilities Act of 1990 requires those with federal contracts or subcontracts in excess of $10,000 to take affirmative action to employ and advance qualified individuals with disabilities ("Section 503"). OFCCP has published implementing regulations in 41 CFR Part 60-741.

One provision of Part 60-741, paragraph (b)(3) of 41 CFR 60-741.4, Coverage and Waivers, permits federal contractors and subcontractors to seek a waiver from Section 503 requirements for facilities that are not connected with the performance of a covered contract or subcontract ("separate facilities"). However, the Rehabilitation Act Amendments of 1992 (Public Law 102-569) states that an entity with a covered contract has all of its establishments subject to Section 503 unless a waiver is granted. The following is the statutory language:

"(A) The Secretary of Labor may waive the requirements of the affirmative action clause required by the regulations promulgated under [Section 503(a)] with respect to any of a prime contractor's or subcontractor's facilities that are found to be in all respects separate and distinct from activities of the prime contractor or subcontractor related to the performance of the contract or subcontract, if the Secretary of Labor also finds that such a waiver will not interfere with or impede the effectuation of this Act.

"(B) Such waivers shall be considered only upon the request of the contractor or subcontractor. The Secretary of Labor shall promulgate regulations that set forth the standards used for granting such a waiver."

Other than minor editorial changes (such as stating that the Deputy Assistant Secretary may execute the waiver), 41 CFR 60-741(b)(3) consists of this language.

On February 14, 1996, OFCCP issued a proposed rule that would establish the standards that DOL would use to determine whether to grant separate facility waivers. Three respondents submitted comments: a government contractor, an organization representing government contractors, and an organization representing disability rights agencies. Their comments were considered in the development of the final rule.

This final rule revises 41 CFR 60-741(b)(3) to require the Deputy Assistant Secretary to consider the following factors when determining whether the facility is "separate and distinct in all respects":

Whether any work at the facility directly or indirectly supports work performed on a government contract.

The extent to which the facility benefits, directly or indirectly, from a government contract.

Whether any costs associated with operating the facility are charged to a government contract.

Whether working at the facility is a prerequisite for advancement in job responsibility or pay, and the extent to which employees at facilities connected to a government contract are recruited for positions at the facility.

Whether employees or applicants for employment at the facility may perform work related to a government contract at another facility, and the extent to which employees at the facility are interchangeable with employees at facilities connected to a government contract.

Such other factors that the Deputy Assistant Secretary deems are necessary or appropriate.

In addition, the Deputy Assistant Secretary must consider the following factors when deciding whether a waiver will "interfere with or impede the effectuation of the act":

Whether the waiver will be used as a subterfuge to circumvent the contractor's obligations under the act.

The contractor's compliance with the act or any other federal, state, or local law requiring equal opportunity for disabled persons.

The impact of granting the waiver on OFCCP enforcement efforts.

Such other factors that the Deputy Assistant Secretary deems are necessary or appropriate.

Contractors must give the Deputy Assistant Secretary access during normal business hours to the contractor's places of business to determine whether the facility granted the waiver meets the standards and requirements for the waiver, and for inspecting and copying books, accounts, and records that may be relevant to the matter.

A waiver will terminate in two years after the date the waiver was granted, except that the waiver will terminate earlier if the facility performs work that supports or contributes to a government contract, or the Deputy Assistant Secretary determines that the information provided by the contractor or any other information demonstrates that the facility does not meet the requirements for the waiver.

False or fraudulent statements or representations made by a contractor in regard to the waiver are prohibited, and the contractor may be subject to sanctions and penalties under Part 60-741 and criminal prosecution under 18 U.S.C. 1001 (fines of not more than $10,000 or imprisonment not more than five years, or both).